Why should you thrust your business into the frenzied world of online auctions? Three words: eyeballs, eyeballs, eyeballs.
"It's really the lowest-cost avenue for start-ups to hook up with major players like eBay, Yahoo! or Amazon," says Sue Rothberg, senior auctions analyst with Lincoln, Massachusetts-based Gomez.com. "Putting your business on high-traffic sites like these allows you to build a brand and a customer base without having to do the marketing."
No need to sell 43-year-old Richard Birnbaum on the idea. He has doubled his sales since putting inventory from his Engelwood, New Jersey-based clothing business, Wearamerica.com, on eBay in January 1999. "There's no place you can advertise that's as cheap as eBay," he says.
Birnbaum says his 11 year-old wholesale company's first experiment with retail was eBay. "Over the course of the year, we've built a million-dollar retail business from nothing," he says. "Now we're doing about $1 million in wholesale and $1 million in retail."
Entrepreneurs who plan to venture into the auction space had better be committed to putting in the hours, Birnbaum advises, and should keep three to four months worth of inventory on hand at all times to maintain consistent sales volume. He says it also helps to work with an auction management service.